We’ve lost count of how many times insiders have accumulated shares in a company that goes on to improve markedly. The flip side of that is that there are more than a few examples of insiders dumping stock prior to a period of weak performance. So we’ll take a look at whether insiders have been buying or selling shares in Fort St. James Nickel Corp. (CVE:FTJ).
Do Insider Transactions Matter?
Most investors know that it is quite permissible for company leaders, such as directors of the board, to buy and sell stock in the company. However, such insiders must disclose their trading activities, and not trade on inside information.
Insider transactions are not the most important thing when it comes to long-term investing. But it is perfectly logical to keep tabs on what insiders are doing. For example, a Columbia University study found that ‘insiders are more likely to engage in open market purchases of their own company’s stock when the firm is about to reveal new agreements with customers and suppliers’.
See our latest analysis for Fort St. James Nickel
The Last 12 Months Of Insider Transactions At Fort St. James Nickel
In the last twelve months, the biggest single purchase by an insider was when insider Gerald Mitton bought CA$100k worth of shares at a price of CA$0.10 per share. That implies that an insider found the current price of CA$0.10 per share to be enticing. Of course they may have changed their mind. But this suggests they are optimistic. While we always like to see insider buying, it’s less meaningful if the purchases were made at much lower prices, as the opportunity they saw may have passed. In this case we’re pleased to report that the insider purchases were made at close to current prices. Notably Gerald Mitton was also the biggest seller.
In the last twelve months insiders purchased 2.00m shares for CA$198k. But they sold 250000 for CA$23k. Overall, Fort St. James Nickel insiders were net buyers last year. You can see the insider transactions (by individuals) over the last year depicted in the chart below. If you click on the chart, you can see all the individual transactions, including the share price, individual, and the date!
There are always plenty of stocks that insiders are buying. So if that suits your style you could check each stock one by one or you could take a look at this free list of companies. (Hint: insiders have been buying them).
Insiders at Fort St. James Nickel Have Bought Stock Recently
There has been significantly more insider buying, than selling, at Fort St. James Nickel, over the last three months. In total, two insiders bought CA$198k worth of shares in that time. But we did see insider Gerald Mitton sell shares worth CA$23k. Insiders have spent more buying shares than they have selling, so on balance we think they are are probably optimistic.
Insider Ownership
Another way to test the alignment between the leaders of a company and other shareholders is to look at how many shares they own. A high insider ownership often makes company leadership more mindful of shareholder interests. It’s great to see that Fort St. James Nickel insiders own 43% of the company, worth about CA$909k. Most shareholders would be happy to see this sort of insider ownership, since it suggests that management incentives are well aligned with other shareholders.
So What Does This Data Suggest About Fort St. James Nickel Insiders?
It’s certainly positive to see the recent insider purchases. And the longer term insider transactions also give us confidence. However, we note that the company didn’t make a profit over the last twelve months, which makes us cautious. When combined with notable insider ownership, these factors suggest Fort St. James Nickel insiders are well aligned, and quite possibly think the share price is too low. Nice! I like to dive deeper into how a company has performed in the past. You can find historic revenue and earnings in this detailed graph.
But note: Fort St. James Nickel may not be the best stock to buy. So take a peek at this free list of interesting companies with high ROE and low debt.
For the purposes of this article, insiders are those individuals who report their transactions to the relevant regulatory body. We currently account for open market transactions and private dispositions, but not derivative transactions.
If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned.
We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Thank you for reading.